Sri Lanka ports awaits call after disappointing year
View(s):By Sunimalee Dias
Teeing off has become the name of the game for bagging deals and getting appointments with the management of international shipping lines for Sri Lanka’s Ports Authority (SLPA) Chairman Dr. Priyath Bandu Wickrama.
A cricketer, he took to golf in 2009 as part of a practical requirement to ensure there is an increased chance of engaging with key officials as he eyes port development in Sri Lanka. He made these observations with the Business Times during an interview on December 31, at his office room in Colombo, which also has a golf putting practice device on the floor just near his table.
This was believed to be the environment surrounding the discussions between shipping lines and the SLPA to establish a hub status for Colombo with plans being drawn up for the next 2-3 years, Dr. Wickrama explained.
He pointed out that shipping lines would not take a risk in engaging with the respective ports around the world.
In this respect, shipping lines are in discussion for terminal agreements as well to be signed within the first quarter of this year, he said. But this time these agreements would entail facilities provided, guarantees and productivity as well.
Currently, the Colombo port’s productivity is at 22 per cent, he said after providing adequate training. Productivity at the port dropped but was blamed by authorities on the old equipment as opposed to labour issues.
The East terminal operated by SLPA would be ready by August this year and was likely to add 5 million TEUs to the existing capacity, it was pointed out.
Commenting on industry concerns regarding the ‘cabotage’ law (which allows foreign carriers to operate within India) at Indian ports he was confident that it would not pose a risk to Colombo’s hub status.
File pic- A worker takes a break during construction of the new harbour last year.
In fact, he was skeptical of India’s growth targets noting it was only attempting to reach 30-40 million container target from the current 10-11 million TEUs.
He noted that while Sri Lanka aims at achieving 10 million-TEU capacity by 2020 India would reach 25 million TEUs capacity.
Marketing Sri Lanka
In a bid to increase its potential in the region, the SLPA is looking at the African continent to upscale transshipment volumes. In addition marketing campaigns were commenced in Singapore, Dubai, China and India targeting investors.
On the other hand, in a bid to attract more volumes, the authorities are looking keenly at the Indian, Bangladeshi, Pakistani and East African states.
Growth volumes and revenues
Dr. Wickrama observed that next year would be challenging as India had forecasted a drop in volumes and the growth forecast dropped by 1 per cent.
On the other hand, Colombo recorded an overall volume growth of about 1.5 per cent with 1 per cent from SLPA and 4.8 per cent drop from the South Asia Gateway Terminal (SAGT) by end of November compared to the same period last year. The Colombo port accounts for 65 per cent of its transshipment business from vessels heading for India, he said.
“I’m satisfied with the growth,” he commented on the performance explaining, “If you look at it from a government terminal operator, it is a good achievement.”
Hambantota happenings
Dr. Wickrama said the Hambantota port had not achieved its revenue targets for 2012 and compared to the targeted figure at Rs.500-600 million the port was likely to generate only approximately Rs.150 million.
Authorities blame the reason for the drop in revenues to businesses that were approved for commencement at the port delayed construction since rates were too high.
The Ports Chairman expected the revenues to be accrued this year once the factories commence work and start construction.
The ad hoc business generated at the port is in the form of bulk transshipment of close to 30 shiploads of vehicles from Hambantota to various other countries.
It was pointed out that initially Colombo was handling only around 1000 vehicles for transshipment but that Hambantota was able to generate at least 3000 vehicles for transshipment.
Dr. Wickrama was positive of achieving at least 20,000 transshipment units this year this would be in addition to the current vehicle shipments for the local market.
This transshipment cargo was sent from India’s Hyundai vehicle manufacturer en route to Dubai and East Africa, he stated.
In view of these developments the chairman remained optimistic of making revenue gains at the new port this year but this would largely depend on the construction work of the new businesses coming in.
SLPA was in agreement with Renuka Sugar Co. for the construction of a factory at the port for which it was believed that work would commence this month.
The car assembly manufacturers Micro and Senok had moved out of the Hambantota port and were shifting their location to the Board of Investment (BOI) zone close to the port, Dr. Wickrama said.
He noted that these businesses had found the Hambantota port charges too high and had wanted to move out for which authorities had told them to shift to the BOI zone that would be linked by road to the port.
“Investing in Hambantota means there’s potential to develop their business,” he explained however, prospects still remain uncertain as investors had expressed concerns of the returns since “they tried to get the minimum cost and a maximum return.”
He also pointed out that clearance for the businesses to set up at the port had taken at least over one and a half years but believed these establishments would commence construction this year.
He explained that the free port status at Hambantota was initiated due to the need for the ncreased value addition requirement from Sri Lanka prior to exporting.
Taking Dubai and the Salalah ports into consideration as models the SLPA have also provided for a restriction –free zone within the port where businesses would be able to establish factories paying only the port charges and no extra duties.
Hambantota port, which concluded its second Request for Proposals (RFP) on September 30 has shortlisted 11 that are currently under evaluation, he said.
On the other hand, the Trincomalee RFP has shortlisted seven companies out of which three are cement factories, the chairman stated.
| New port City in Colombo gets first Chinese firmThe new port city in Colombo that would be constructed from reclaimed land has attracted its first customer, a Chinese company, not selected following a call for tenders, Dr. Wickrama said.This would mean that the Chinese company would be afforded at least 60-70 acres of land on the 575 acres of reclaimed land on the port city. Currently, he explained it was still under negotiation with the Technical Evaluation Committee and the Cabinet Appoint Negotiation Committee. “We created this and publicized it internationally,” he said adding that following this announcement only one interested party was attracted. SLPA expects to incur a cost of US$800 million for the entire project, which is also currently under negotiation.The land would be given on a 99-year lease and it was pointed out that 300 acres of this land would be on sale for more investors in the future. |
| Wickrama and the Rajapaksa’sDismissing allegations of any relations with the first family, Dr. Wickrama did not want to talk about this.But while he was quick to point out, “I have no political family background” he noted that it was due to President Mahinda Rajapaksa’s foresight in sensing his abilities that he was picked to head the current post of Chairman of Sri Lanka Ports. After graduating in 2000 he worked as a Mechanical Engineer in 2001 with the Ports Authority.He is said to be the first ever youngest Chairman to assume duties in this post in the 29-year-old history of the SLPA and only permanent employee at the establishment to head the organisation. “I knew him (President) for some time since my childhood days,” he said, adding that his father is from Walasmulla in Hambantota. Negotiations with Indian firm on assembly plant SLPA said they were still in negotiation with a top India vehicle manufacturer planning to establish a car assembly line at the Hambantota port. New port City in Colombo gets first Chinese firm The new port city in Colombo that would be constructed from reclaimed land has attracted its first customer, a Chinese company, not selected following a call for tenders, Dr. Wickrama said. This would mean that the Chinese company would be afforded at least 60-70 acres of land on the 575 acres of reclaimed land on the port city. The land would be given on a 99-year lease and it was pointed out that 300 acres of this land would be on sale for more investors in the future. Colombo port volumes dip Colombo port’s growth for last year dropped by 1.8 per cent compared to 2011 owing to global conditions as a result of which there was a drop in vessels calling over, SLPA Chairman Dr. Priyath Bandu Wickrama said. SLPA was up marginally up by 0.76 per cent by the end of December with 2.316 million TEUs whereas SAGT recorded a drop in volumes by 4.78 per cent and had recorded a volume of only 1.869 million TEUs. Meanwhile, SLPA expects to attract at least 2.45 million TEUs this year, the chairman said. Sri Lanka not on “string of pearls” With China looking at establishing its links on the shipping routes within and out of Asia, it is believed that Sri Lanka’s Hambantota port that is constructed by the Chinese authorities is one among its “string of pearls” on the Asian route.However, Ports Authority Chairman Dr. Wickrama dismissed this stating “Sri Lanka is not in the string of pearls of China.” He explained that previously when the Japanese were in the Colombo port it was believed that there would be a Japanese military base established here but this was not the case. Similarly with Oluvil being constructed under DANIDA from Denmark it was thought they would be taking over, but he noted that all these ports came under the purview of the SLPA.
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